What Is a Stablecoin?
A stablecoin is a type of cryptocurrency designed to maintain a steady value relative to a specific asset, most commonly the U.S. Dollar.
Unlike volatile assets like Bitcoin, stablecoins aim for a 1:1 price peg, making them essential tools for global payments, savings, and trading without market surprises.
Stablecoins achieve stability through three primary mechanisms:
- Fiat-Collateralized: Backed 1:1 by real-world assets like cash and U.S. Treasuries (e.g., USDC, USDT). These are considered the safest due to transparent reserves.
- Crypto-Collateralized: Backed by other cryptocurrencies, often "over-collateralized" to absorb market swings (e.g., DAI).
- Algorithmic: Use smart contracts and market incentives to manage supply. These carry higher risk, as seen in the 2022 Terra (UST) collapse.
While designed for stability, they are not risk-free. Risks include depegging (losing the $1 value), reserve transparency issues, and smart contract vulnerabilities. For maximum security, users should prioritize reserve-backed coins with frequent third-party audits.
Stablecoins in KAST
KAST offers support for five different stablecoins:
- USDC
- USDT
- USDe (for advanced users)
- PYUSD
- RLUSD
With the KAST Earn feature, you can earn flexible yield provided by Gauntlet by putting your USD to work.
